Thursday, March 5, 2009

My colleagues and good friends at Raybin Associates have put out the best thing I have so far seen on fund raising in these daunting times. What makes it different is that it has real ideas that nonprofits - regardless of size, cause, or experience can put to use.

With their permission:

“Ten Things Your Board Can Do…” “Eight Things to Tell Your Donors…” Avidly, we read each article as it comes across our desks, looking for magic. Surely, someone smarter than we must know how to bolster our fundraising in these parlous times. But we are disappointed. “Focus on your mission.” “Monitor expenses carefully.” “Be strategic.” “Thank your donors.” Please… tell us something we don’t know.

Despite all that is being written about the new philanthropic reality, no one can say what the world will look like in the next six months, 12 months, two years. All we have right now is a collection of anecdotes – many of them contradictory:

·The Brooklyn Academy of Music just announced a $300+ million building and endowment campaign. Carnegie Hall and the Metropolitan Opera are cutting their programming this season. WNYC (New York public radio) reports the completion of a $63 million campaign – $5 million over goal – with the last $11 million raised since September, 2008.

·We know of a cancer research organization in New York whose late fall Gala has historically been almost entirely supported by the financial services industry. Yet they raised nearly as much this year as last. But we’re also hearing of organizations canceling or scaling back major events for fear they will fail, or because they might be viewed as too glitzy in a decidedly anti-glitz time.

·Most of our New York City independent school clients report that they are at least holding the line with their Annual Funds at year-end – though it’s unclear what final numbers will look like in June. But we’ve seen some national data suggesting that annual giving in schools is down an average of about 9% this year.

·There are reports of people whose financial circumstances have not changed appreciably stepping up to larger gifts to compensate for those who cannot give as much this year.

We also have some facts. More than 40 years of data from Giving USA makes clear that even in extended downturns and recessions, philanthropy decreases less than other aspects of the economy. While the current situation is unprecedented in our lifetimes, we think it likely that experience will hold true again. (For more on the data, go to our website, www.raybinassociates.com, and click on “Giving During Recessions and Economic Slowdowns”on the home page.)

Magical thinking got our economy where it is today. But it is only reality-based action that will eventually get us out. And it will. There is no magic to fundraising, and there never has been.

So what are the “Nine Top Things You Should be Doing to Maximize Your Fundraising in a Downturn and Position Your Organization for the Inevitable Upturn?” Just like everyone else, we’ve been reading all the words of wisdom out there. Summarized, tempered by our collective century of experience, and with a few contrarian thoughts, we offer the following recommendations.

No magic here, just practical, common sense advice:

1.Development 101 has never been more important.Ask respectfully for your donors’ support. Thank them promptly and appropriately.

2.Pessimism becomes a self-fulfilling prophecy. Stop using very negative language like “dire” and “catastrophe.” It’s not time to panic.

3.Board members and volunteers may bring their personal anxieties to the table. If they’re feeling poorer, and especially if they have lost high-status, high-paying jobs, they may be reluctant to consider initiatives that could require them to take visible positions as leaders and donors. Reassurance from the CEO and Development staff about their value to the institution may be required. But in extreme situations, when their negativity becomes a serious drag on the organization, they may need to be encouraged to take a leave of absence from their leadership positions.

4.Don’t insult your donors by assuming they won’t be able to give this year and leaving them out of Annual Fund solicitation – even if they worked for Bear Stearns, Lehman Brothers, or Merrill Lynch. Maybe they can’t do $25,000 again, but if they’ve been steady supporters and you’ve stewarded them well, they’ll almost certainly try to give something.

5.“Your Annual Fund gift will help support the operating budget” is not a strong enough case for support right now. Be specific as you can about what difference giving will make to core mission-related programs – meals that will be served, families for whom financial aid makes all the difference, inner-city public school children who will still have music classes. Be clear, too, about what may have to be cut.

6.Development staff, Board members, and other volunteers may feel uncomfortable askingright nowand don’t know how to respond to donors who say they can’t give. They may also feel awkward about not being able to give as much themselves. Since you want to be out there asking, it would be a good idea (and probably a great relief) to get staff and volunteer solicitors together to talk about their fears and concerns, and to practice ways to respond empathetically to donors whose circumstances have changed.

7.Don’t switch your fundraising emphasis from current support to planned giving. We’re hearingsome conversation that this is a good way to help donors fulfill their philanthropicurges at a time when significant other giving may be out of the question. We spend a lot of time encouraging our clients to get their planned giving programs off the ground, and would never tell them to back off. And if you’re in an endowment campaign, these planned giving conversations may make sense. But generous as it is, a $250,000 charitable trust from a 50 year-old woman is not going to pay the rent any time soon. As income from all sources – endowment, tuitions, fees, philanthropy, government – declines, the short-term fundraising priority for most organizations must be budget support. You have to be out there asking for current gifts.

An exception may be the donor who wants to set up a charitable lead trust, which provides income to the nonprofit for a fixed period of time, then the principal reverts to the donor or designated beneficiary. Lead trusts, however, are best funded with appreciated assets, so you may not have too many candidates for this planned giving vehicle.

8.If you’ve put plans for a campaign on hold, use this time to make sure your organization is ready to go when things begin to turn around. (Even if you’re not preparing for a campaign, these steps are the foundation of a strong Development program for any organization.)

-Work on Board development to make sure Trustees understand and are comfortable with their leadership roles. Plan some form of education about the issues in your field at each meeting. Be strategic about identifying new skills and talents you’ll need in the future and recruiting new champions for your cause.

-Engage Board, staff, donors, parents/members/users, and friends in developing an action-oriented strategic plan. Identifying a hierarchy of preferred options for the next two to three years will pay tremendous dividends – both in keeping the focus on mission and priorities, and when you get ready to frame your campaign case for support.

-Help Trustees and other volunteers refine their cultivation and solicitation skills with regular training and practice with different scenarios.

-While you’re asking for current support, take the opportunity to deepen relationships with your donors by talking with them about their interests, passions, and concerns. But don’t make every encounter a solicitation.

-Invest in building public awareness about your organization. Identify creative ways to bring the community in to learn more about who you are, what you do, and the people who make it all work. Raise your profile as an “expert” with Op Ed’s and letters to the editor. Take the time to update your website and your publications.

9.Now is an ideal time to take a step back and address all of those operational issues you swear you’re going to focus on in the quiet summer months, but never get around to.

-You may not be able to hire additional staff, but look ahead to what new skills and experience you may need when the economy begins to turn around; draft job descriptions and revise the organizational chart.

-Give existing staff a variety of professional development opportunities that will make them stronger members of your team and equip them for their roles in any future campaign.

-Clean up your database and all those inconsistencies from past file conversions (finally!).

-Start prospect research or update existing work – recognizing that many asset values will be in flux for a while.

-Make sure you have working lists of major prospects, with detailed cultivation steps for each. Make it someone’s explicit responsibility to ensure that the plans are implemented and updated. Schedule at least bi-weekly prospect management meetings.

Some of the organization-building tasks identified in 8 and 9 above can be effectively undertaken by experienced staff and Board members. But others (strategic planning, a Development Audit, perhaps Board development and public awareness) usually benefit from guidance by seasoned outside consultants.

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We know that giving is going to drop. The combination of the stock market contraction and the decline in personal income make that a virtual certainty, for philanthropy closely tracks both. But in this peculiar time of anxiety and hope, we believe that with sensitive asking, plenty of support for solicitors, pinpoint clarity about what difference people’s gifts will make, and a reasonably upbeat attitude, all organizations have it within their control to keep the slide from being cripplingly steep.

Tuesday, March 3, 2009

Yesterday the Dow fell to 6723.29 its lowest close since April 1997 when it sank to 6583.48 It had begun the year at 6448.27. Over the rest of the year the market steadily rose and closed out at 7908.25 racking up 1459.98 points up 18%. So far this year the Dow has shed 1577.57 points and the mood out there is dismal with the market having tumbled 15% since January 2nd, and it is now down 50% from the 14000 high in October 2007.

Because the market bounced 1997 ended on an optimistic note that was reflected in Giving USA's 1998 data. In 1997 giving rose from $133.46 to $143.46 billion. To put this in perspective giving in 1997 was 1.8% of GDP and last year with the absolute dollars more than doubled reported giving was 2.2% of GDP.

The last quarter of 2008 was when the lemmings went over the cliff. In my view the full effect on philanthropy will not be felt until 2010.

Now that we have that out of the way let's eat cat food, up our meds, move to windowless offices and get back to client work.

Monday, March 2, 2009

That these are hard times for the nation's nonprofits needs no further elaboration. Charity leaders are criticizing the President's budget plan because it cuts the tax advantage of a gift from people in the 33-35% tax bracket to 28% plus he proposes bumping the capital gains tax from 15-20%. Mercy. New York Times philanthropy beat reporter Stephanie Strom summed it up neatly - "among donors the concern was one of being forced to limit donations when charities need their support the most."

Social scientist Paul Schervisha Giving USA Foundation board member and esteemed colleague says "Obama is setting in place tax-rate and discount-rate policies that tend to lower charitable giving. And he is doing this exactly during a time when the recession, financial insecurity and depreciation of assets also negatively affect charitable giving."

Do I qualify as a "charity leader?" I'm president of Women's Prison Association, treasurer of Jazzmobile and a director of PICO National Network and Giving USA Foundation. And I disagree with the other anointed leaders: My take is that the $300 billion plus donated to US charities is a pimple on the great butt of the government trillions it will take to turn this nation around. Or otherwise put the insiders' chattering about the lessened charitable deduction fails utterly to consider that without the government contracts and grants that pass through the books of virtually all but discretely religious organizations private philanthropy - essential as it is - will simply not cut it.

The greater good is in Obama's courageous commitment to taking on all interest groups, including ours, because that is exactly what's required. My guess is at least 90% of the so called "charity leaders" voted for him, not exactly a shocker given the Ken and Barbie alternatives. Obama made clear his priorities throughout the campaign. What's the big surprise here?

Stephanie Strom also quoted veteran New York consultant Margaret Holman: "Research has shown again and again that for major donors, taxes are at the bottom of their list of reasons they make these gifts" and she reported Giving Institute director Bob Sharpe's trenchant observation that the alternative minimum income tax already limits the charitable tax deduction to 28% for the very wealthiest donors.

Giving USA has been measuring the philanthropy handle since 1967. The bar chart looks like a Madoff report: up virtually every year for 40 years - through recession, war, rampant inflation, high hem lines, low hem lines, 9/11 - and tinkering from time to time with the charitable deduction.

Yes as a professional I'd like those who give the most to get the most. But as I Brasso their plaques I'd like to see universal health care, a green environment, poor kids who can read and write, full employment - and if the arts can't prosper they should at least flourish.

Not to mention an end to foreclosures, two wars and serious jail time for the anti-government Ayn Randers whose (objectivist) greed got the country into this mess.

Charity is big business, 10% of employment, 2% of GDP, millions of organizations; we are as much a special interest as farmers, oil companies, defense contractors etc. Somebody needs to put total interest over self interest.